Federal public service unions are calling out the government’s plans to reduce pension contributions, arguing it is “unacceptable” for the government to strip public servants of enhanced pensions.
The changes date back to Budget 2025, when the government announced it would “initiate consultations” on reducing annual pension contributions, citing Canada Pension Plan and Quebec Pension Plan enhancements that were phased in starting in 2019.
Budget 2025 said that reductions in contributions would “ensure that federal employees continue to receive the same pension benefits, without overcontributing.”
The issue resides in the legislation that mandates that public service pensions be co-ordinated with the CPP and QPP to equal two per cent for each year of service. When the enhancements to CPP and QPP kicked in in 2019, contributions were not reduced for public servants.
“Since that time, federal public service employees and the government have been contributing more to CPP/QPP than before 2019 to fund the higher CPP/QPP pension benefits,” Daphney Degand-Emmanuel, spokesperson for Treasury Board Secretariat, said in a statement.
“However, the public sector pension plans have not been adjusted to reflect this enhancement,” she added.
The federal government is maintaining that the changes would wind back public service pensions back to pre-2019 levels as determined by legislation. But public service union leaders argue that winding back the clock robs public servants of enhancements to CPP and QPP for short-term budget reductions.
Bernard Holbrook, president of the Research Council Employees’ Association, called the proposed changes to the pension contributions “unfair,” pointing to other workers across Canada that would not be penalized because of CPP enhancements.
“Everyone else in Canada is going to get an increase in CPP and increase to their retirement benefits, and we’re not,” Holbrook said.
The federal government is maintaining that the changes would “realign” public service pensions to the original formula and would not impact surpluses to the pension plans, Degand-Emmanuel said. In Budget 2025, the federal government estimated that reducing pension contributions would create fiscal savings of around “$1.1 billion over four years starting in 2026-2027, and $384 million ongoing from lower pension expenses for the government.”
According to Gregory Harlow, president of the Association of Justice Counsel, with the proposed contribution changes and the past several years of unpermitted surplus, a term for the excess surplus from the Public Service Pension Plan that is returned to the government’s operating budget, each public servant is having thousands of dollars removed from their pension.
